- The Loonie loses ground vs. the greenback amid a worst-than-expected US economic data releases.
- US Retail Sales contracted the most in 10 months.
- USD/CAD Technical Outlook: Upward biased, although the spot is above the 200-DMA, is nearby, so caution is warranted.
The USD/CAD climbs during the New York session after the reléase of December’s retail sales showed a contraction deeper than expected. At the time of writing, the USD/CAD is trading at 1.2528, up some 0.06% during the New York session.
In the meantime, the US Dollar Index, a gauge of the greenback’s value against a basket of six peers, recovers some 0.15%, close to the 95.00 level. At the same time, Western Texas Intermediate (WTI’s), which price influences the oil-linked Canadian dollar, edges up 1.56%, trading at $83.16 per barrel, though failed to underpin the CAD.
Retail Sales in the US shrank in December
Before Wall Street opened, the US Department of Commerce released the Retail Sales for December, which contracted by the most in 10 months, 1.9%, lower than the -0.1% foreseen by analysts. Further noting, sales excluding autos and gasoline, for the same month, slumped 2.5%, while in the previous month, contracted 0.1%.
Some minutes after retail sales were unveiled, US Industrial Production in December shrank 0.1%, lower than the 0.3 increase estimated by economists polled by Reuters.
That would leave USD/CAD traders waiting for January’s University of Michigan Consumer Sentiment on its preliminary reading, expected at 70.0.
USD/CAD Price Forecast: Technical outlook
Per the USD/CAD daily chart, the pair is “still” upward biased. However, on Thursday, the USD/CAD dopped beneath the 200-daily moving average (DMA), which sits at 1.2501, reaching a daily low at 1.2453. Nevertheless, USD/CAD buyers entered the market, capped the fall, and reclaimed the 200-DMA, leaving the trend intact.
The USD/CAD first ceiling level would be the January 12 daily high at 1.2580. A breach of the latter would expose the 1.2600 figure, followed by the 100-DMA at 1.2523.
Contrary, on the downside, the pair’s first support would be the 200-DMA. A daily close under it could send the pair tumbling to November 10, 2021, cycle low at 1.2386, but it would need to sort a few hurdles on the way down. The second support would be the January 13 daily low at 1.2453, followed by 1.2400 and the previously mentioned November’s pivot low.